Weekly review
By Josh White
Date: Friday 17 Jan 2025
(Sharecast News) - The FTSE 100 ended the week up 256.73 points, or 3.11%, closing at 8,505.22 on Friday.
Equity view
AstraZeneca has announced that its Calquence drug has been approved in the US when used alongside chemoimmunotherapy for patients with previously untreated mantle cell lymphoma (MCL). Calquence (otherwise known as acalabrutinib), is now the first and only BTK inhibitor - drugs which block activity of the Bruton's tyrosine kinase enzyme - approved for the first-line treatment of MCL in the country.
Self-storage group Big Yellow delivered a cautious outlook on trading on Friday as it reported a decline in occupancy levels over the third quarter, and said it plans to cut jobs as it deals with higher National Insurance payments to employees from April. Big Yellow estimates that it will have to pay out £0.5m more each year due to the changes in NI contributions announced in October's autumn budget.
Telecoms testing company Spirent Communications said it expected flat annual earnings and lower revenues after a "challenging" year but reported a strong uptick of order growth in the fourth quarter. Full year adjusted operating profit for the 12 months to December 2023 is forecast to be similar to 2023's $45.2m. Revenue growth in the fourth quarter, and for second half of the year was 5%, resulting in full year revenue of around $460m, compared to $474m in 2023 as a return to growth in North America and Europe offset a fall in China, it added.
Investment manager Ninety One reported an increase in assets under management on Friday, to £130.2bn as of 31 December. The FTSE 250 company said that marked a rise from £127.4bn recorded at the end of the prior quarter on 30 September. It was also an increase from the £124.2b it reported at the same point in 2023.
Mining giant Rio Tinto reported a fall in iron ore shipments in the fourth quarter but noted that the Chinese property market was stabilising. Heavy rains in Western Australia impacted shipments in the three months to December, which were down 1% - slightly missing expectations, Rio said on Thursday. It added that the Chinese economy still faced headwinds from an ongoing property market oversupply, "although the November data on home sales and prices showed signs of stabilisation following many months of policy loosening".
Taylor Wimpey backed its profit expectations for the full year on Thursday but sounded a note of caution as it pointed to increased build costs in 2025. In an update ahead of its results for the year to the end of December, the housebuilder's total completions including joint ventures fell to 10,593 from 10,848 in 2023. UK home completions excluding joint ventures were 9,972, down from 10,356.
IG Group said it was buying online trading platform Freetrade for £160m as it looked to expand its UK investment offering. Freetrade allows customers to trade in stocks, bonds and other asset classes via an app on their phones. It currently has 720,000 customers and has £2.5bn in assets under management.
Recruitment firm Hays said it had appointed Michael Findlay as a non-executive director and chair-designate, succeeding Andrew Martin who is retiring on May 1. Findlay will join the board on January 20. He is currently non-executive chair of London Stock Exchange and a non-exec at Royal Mail owner IDS. He was also chair at Morgan Sindall but announced his retirement from that post on Wednesday.
LondonMetric Property said it had sold 10 non-core properties for £74.2 million and bought seven more for £50.1m. Chief executive Andrew Jones said: "We have again successfully disposed of non-core assets at prices in line with our valuations and reinvested into higher quality opportunities in strong conviction sectors, where rental growth prospects are more compelling."
Animal genetics firm Genus said on Wednesday that it expects full-year adjusted pre-tax profit to be at the top end of the range of market forecasts after a strong first half. Consensus expectations are for a range of between £63m and £67.4m. In an update for the six months to the end of December, Genus said it expects first-half adjusted pre-tax profit of £35m, which is ahead of expectations.
International Distribution Services reported a slight rise in revenue during the busy Christmas period as its Royal Mail business handled more international parcels. The company, about to be taken over by Czech billionaire Daniel Kretinsky this year, said group revenue rose 0.8% to £3.6bn as international parcel volumes increased 15% to 61 million items in the three months to December 31.
Morgan Sindall said chair Michael Findlay is to retire in July after nine years in the post and had appointed Peter Harrison as a non-executive director and chair designate with effect from May 6. Harrison was group CEO at Schroders until last November. Prior to that his roles included chair and CEO of RWC Partners, global chief investment officer at Deutsche Asset Management, and head of global equities at JP Morgan Asset Management.
Ocado Retail delivered a strong finish to its financial year, with sales growth accelerating in the fourth quarter as weekly orders reached a milestone of 500,000 for the first time. The company, which is the grocery joint venture between Ocado Group and M&S, reported retail revenues of £715.8m for the 13 weeks to 1 December, up 17.5% year-on-year and a pick-up from the 15.5% growth seen in the third quarter.
Smiths Group announced the retirement of chief financial officer Clare Scherrer on Tuesday, confirming her successor while also upgrading its guidance for revenue growth. The FTSE 100 company said Scherrer would step down from her role on 31 January and leave on 30 April, following a handover period through the release of the 2025 first-half results. Scherrer's successor would be Julian Fagge, currently president of Smiths Interconnect.
Energy major BP said it now expects to report lower upstream production for the fourth quarter, while tax charges and foreign exchange losses for the full year will be greater than previously expected. Upstream production in the final three months of 2024 was down on the third quarter, the company said on Tuesday, with output across oil, gas and low carbon energy all declining over the period.
Aerospace and defence firm Chemring announced on Tuesday that its Roke subsidiary has signed a multi-year agreement with a major US prime contractor for the supply of its high-speed Miniature Radar Altimeter. The FTSE 250-listed group stated that with a value of at least £26.0m over four years, with deliveries commencing in October 2025, production will take place at Roke's Romsey, UK, site.
GSK on Monday said it was buying US-based biopharmaceutical company IDRx for up to $1.15bn. IDRx specialises in developing treatments for gastrointestinal stromal tumours (GIST), GSK will pay $1bn up front with the potential for a further milestone payment of $150m.
Fintech group Plus500 beat market forecasts with its results for 2024, driven by a solid end to the year with customer numbers surging 45% over the final quarter. The online CFD trading platform said in a pre-close update on Monday that full-year revenues would be $768m, generating EBITDA of $342m, well ahead of the company-compiled consensus estimate of $725m and $338m noted in late-October.
Property group Great Portland Estates has announced that broadcaster ITN has renewed two leases at its media hub near Farringdon, committing to a further 10 years. ITN has renewed both of its leases for 117,000 square feet of workspace at 200 and 214 Gray's Inn Road in WC1, occupying 40% of the total floor area across the two properties where it produces news programming for ITV, Channel 4 and Channel 5.
Gambling giant Entain reaffirmed its full-year 2024 EBITDA guidance on Monday, buoyed by operator-friendly sports results during the final quarter of the year. The FTSE 100 company said it now expected group EBITDA to land at the top of its previously stated range of £1.04bn to £1.09bn. That marked an improvement from its October projection, which anticipated results toward the upper end of the range.
Economic news
UK retail sales unexpectedly fell in December, according to data released on Friday by the Office for National Statistics. Retail sales declined by 0.3% on the month following a downwardly-revised 0.1% increase in November. Economists were expecting a 0.4% jump. The ONS said falls in supermarkets were partly offset by a rise in non-food stores, such as clothing retailers, which rebounded from declines in recent months.
The UK housing market ended 2024 on a strong note, industry data showed on Thursday, with prices rising across the country. According to the latest residential market survey from the Royal Institution of Chartered Surveyors, the house price balance was 28 in December, up from 24 in November. It was the highest reading since September 2022. That was the last survey before Liz Truss' disastrous mini budget, which led to soaring borrowing costs, a spike in mortgage rates and a slump in house purchases.
The UK economy returned to growth in November last year, according to figures released on Thursday by the Office for National Statistics. The economy grew 0.1% following contractions of 0.1% in October and September, although this was below expectations of 0.2% growth. Most of the growth was put down to a 0.1% expansion in the services sector, following a revised 0.1% drop the month before.
UK house prices sparked in November, official data showed on Wednesday, on the back of robust demand for property. According to the latest house price index from the Office for National Statistics, average UK house prices rose 3.3% in the 12 months to November, to £290,000. That compares to October's growth rate of 3.0%. All parts of Great Britain saw increases. The highest was in Scotland, where average prices jumped 4.7% to £195,000. In England and Wales average prices rose 3% to £306,000 and £219,000 respectively.
UK inflation unexpectedly eased in December after two months of increases, according to data released on Wednesday by the Office for National Statistics. Consumer price inflation rose 2.5%, down from 2.6% in November, and versus expectations for it to remain unchanged. Meanwhile, core inflation - which excludes food and energy - declined to 3.2% from 3.5%, versus expectations for a smaller drop to 3.4%.
A closely-watched auction of government debt was three times over-subscribed, the Debt Management Office confirmed on Tuesday. According to the DMO, it received bids totalling £3.06bn in an auction of £1bn of 1.25% Index-linked Treasury Gilt 2054. The auction came amid turmoil across the UK and US government bond markets.
Britain's 2025 growth forecast has been ticked up by the International Monetary Fund, while the Washington-based organisation also warned about the impact of incoming US President Donald Trump's plans for tariffs, tax cuts and looser regulation. In a much-needed boost to embattled Finance Minister Rachel Reeves, the IMF said it expected the UK economy to grow by 1.6% in 2025, up from an earlier forecast of 1.5%, citing the new Labour government's higher investment spending, better household finances and interest rate cuts by the Bank of England.
International events
Final estimates for the eurozone consumer price index confirmed that inflation had risen to a five-month high in December, though price pressures are expected to cool in the coming months. According to Eurostat, the annual rate of CPI inflation last month was 2.4%, in line with the flash estimate released two weeks ago and up from 2.2% in November. This was the third straight increase and the highest reading since July, with inflation rebounding significantly after dropping to a three-and-a-half-year low of 1.7% in September.
China's economy exceeded expectations in the fourth quarter of 2024, expanding by 5.4% as a wave of government stimulus measures drove activity. The stronger-than-expected performance brought full-year GDP growth to 5.0%, aligning with Beijing's target of "around 5%", according to data released by the National Bureau of Statistics on Friday. The fourth-quarter surge marked an improvement from 4.6% growth in the prior quarter, and helped offset weaker results earlier in the year. However, 2024's growth rate was slower than the 5.4% recorded in 2023.
Consumer spend in the US slowed a tad at the tail-end of 2024, but sufficed for economists to lift their fourth quarter growth forecasts. According to the Department of Commerce, in seasonally adjusted terms retail sales volumes expanded at a month-on-month pace of 0.4% in December to reach $729.2bn (consensus: 0.6%). The prior month's estimate meanwhile was revised higher by a tenth of a percentage point to reveal a rate of expansion of 0.8%. Sales of motor vehicles and parts increased by 0.7% on the month and those at furniture and home furnishing stores by 2.3%.
Americans lined up for unemployment benefits at an accelerated pace in the week ended 11 January, according to the Department of Labor. Initial jobless claims rose by 14,000 to 217,000, firmly above market expectations for a reading of 210,000 and marking a sharp increase from the upwardly revised, 11-month low in the previous week. Continuing claims unexpectedly fell to 1.85m, while the four-week moving average came to 212,750, a decrease of 750 from the previous week's revised average.
The eurozone almost doubled its goods trade surplus with the rest of the world to €16.4bn in November on a monthly basis, according to official data published on Thursday. Exports of goods to the rest of the world fell 1.6% year on year to €248.3bn. Imports fell 1% to €232bn. The surplus increase from October's €8.6bn was mainly due to an increase in the surplus for chemicals and related products to €23.4 bn from €20.7 bn and a shift in the balance for other manufactured goods €1.9 bn from -€1.2 bn.
The cost of living in the US rose more quickly than expected at the tail end of 2024 as energy prices spiked higher. Core inflation however undershot economists' forecasts. According to the Department of Labor, the headline Consumer Price Index rose at a month-on-month pace of 0.4%, amid a 4.3% surge in petrol costs, and by 2.9% year-on-year. The latter was up from the 2.7% clip observed in November and ahead of the 2.8% consensus forecast. Core CPI, which omits food and energy due to their sometimes big swings in prices, increased by 0.2% on the month and 3.2% on the year (consensus: 3.3%).
Eurozone November industrial production rose slightly by 0.2% on a monthly basis, according to official data published on Wednesday. On an annualised basis, industrial production decreased by 1.9% the euro area and by 1.7% in the EU.
The German economy shrank for the second year in a row in 2024, official data showed on Wednesday, weighed down by weakness across both manufacturing and construction. According to first estimates from Destatis, Germany's Federal Statistical Office, GDP contracted by 0.2% year-on-year in 2024. That compares to a 0.3% decline in 2023. Within that, gross value added in the manufacturing sector slid 3.0%, and by 3.8% in construction.
Sentiment among small businesses in the United States rose to its highest in more than six years as optimism surrounding the economic outlook continued to improve following the presidential elections. The monthly Small Business Optimism Index from the National Federation of Independent Businesses (NFIB) rose to 105.1, up from 101.7 in November and well ahead of the 100.8 reading expected by analysts. This was the second straight month of a print above the historic average level of 98 and its highest reading since October 2018.
US wholesale inflation rose less than expected in December, according to the Bureau of Labor Statistics, principally due to heightened energy prices throughout the month. December's producer price index increased by 0.2% last month, down from the previous month's 0.4% increase. On an annualised basis, producer prices were up 3.3% year-on-year, down from 3.4% in November. The index for final demand services was unchanged, while final demand goods prices climbed 0.6% on a monthly basis.
China said its trade surplus reached almost $1trln last year as its exports continued to dominate with a potential trade war looming days ahead of Donald Trump's inauguration as US president. The General Administration of Customs said $3.58trln of exports left the country last year, with imports coming in at $2.59trln. The $990bn surplus broke the previous record of $838bn in 2022. Trump, who takes office next week, has threatened to impose tariffs on China and other countries, heightening an already aggressive trade stance against the world's second-largest economy.
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